Problem 14-11 (Algo) (LO 14-4, 14-5, 14-6)

A partnership begins its first year of operations with the following capital balances:

Winston, Capital$90,000Durham, Capital80,000Salem, Capital90,000

According to the articles of partnership, all profits will be assigned as follows:

• Winston will be awarded an annual salary of $14,000 with $7,000 assigned to Salem.
• The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year.
• The remainder will be assigned on a 5:2:3 basis, respectively.
• Each partner is allowed to withdraw up to $8,000 per year.

The net loss for the first year of operations is $34,000 and net income for the subsequent year is $27,000. Each partner withdraws the maximum amount from the business each period. What is the balance in Winston's capital account at the end of the second year?

Multiple Choice

• $69,850
• $76,950
• $64,500
• $77,850